Monitor: Eddie George on unemployment

Reflections on comments by the Governor of the Bank of England about the effects of high interest rates

Research Sally Chatterton
Friday 23 October 1998 23:02

The Express

CRASS. STUPID. Offensive ... yes, all those and more. Eddie George's comments that lost jobs in the North are an "acceptable price to pay to curb inflation in the South" are breathtaking in their insensitivity. The charitable view is that Mr George had enjoyed too good a lunch. But unfortunately, the more likely explanation is that his remarks reveal all too clearly the mindset not just of the Governor of the Bank of England but of many of his colleagues.

It has been obvious to most objective observers of the economy that Britain is either heading for, or on the verge of, a major recession. Yet Mr George's response has been an ostrich-like failure to acknowledge what is going on around him. A quarter per cent cut in interest rates is not enough. Many commentators have wondered just why Mr George has seemed so insouciant to the problems of manufacturing. His comments yesterday show that he simply doesn't care.


Yorkshire Post

EDDIE GEORGE let the cat out of the bag. The price for keeping inflation down to the Government's target is higher unemployment. But the Governor of the Bank of England should not be left to take the rap for the growing rash of job losses in northern-based manufacturing firms. The ground rules for the Bank's monetary policy committee were devised by the Chancellor, Gordon Brown, not the old lady of Threadneedle Street. Yet the Chancellor, who lectures others about personal responsibility, stubbornly refuses to accept his policies are causing pain in Labour's heartlands.


Daily Mail

MR GEORGE was hit with a sucker punch he ought to have seen coming a mile off. A figure of his eminence should know better than to give the impression that he thinks northern unemployment is an acceptable price to pay for curbing southern inflation. Still, however crassly he chooses to say that interest rates suitable for one area might be unsuitable for another, he makes an important point, which should be borne in mind as the diverse regions of Europe yoke themselves together in the single currency. The potential for pain and resentment will be even greater.


The Scotsman

EDDIE CAN look after himself, Tony Blair insisted, unconvincingly. But just in case this assessment of Mr George's ability to extract his foot from his mouth was mistaken, No 10 launched a rearguard action to depict the Governor's gaffe as down to misrepresentation. There was no question, ministers insisted through gritted teeth, that Eddie was saying unemployment was the price to be paid for low inflation. The only problem is that this is more or less exactly what the Bank of England's monetary policy committee has been saying for months.There will be fireworks if Mr George fails to act decisively. The Tories will not hesitate to remind the public that it is the Chancellor, not Mr George, who lays down the targets that the monetary committee strives to meet.


The Mirror

EDDIE GEORGE, the Governor of the Bank of England, made a fool of himself, which does not help the Prime Minister. Mr George suggested that unemployment in the North might be the price to be paid for curbing inflation in the South. The Governor says that is not what he meant. But it certainly sounded like it. Which makes it look like control of interest rates has been handed over to a man with no compassion or feeling for the problems of business or workers. It made it even worse that Rover announced 2,400 job losses on the same day. High interest rates have been the straw which broke its back. The Government needs to take action. Tony Blair wants to ease the pain of economic swings, for he believes that is the best way forward. But the cost of getting it wrong would be enormous. For us and for him.

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